Shri. Rangegowda Kumaraswamy, Tarikere V. Income-Tax Officer, Ward-1, , Chikmagalur

ITA 680/BANG/2023

• Counselvise Citation: [2023] 100 COUNSELVISE.COM (IT) 5871 (ITAT-BANGALORE)
• Duration Of Justice: 1 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-10-2023
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: B
• Next Hearing Date: 30-10-2023
• Assessment Year: 2017-2018
• Appeal Filed On: 12-09-2023
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Reasonable cause; Condonation of delay
• Section: 143(3); 250; 143(2); 69A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL “SMC - B” BENCH : BANGALORE BEFORE SHRI GEORGE GEORGE K, VICE PRESIDENT ITA No.680/Bang/2023 Assessment Year : 2017-18 Shri. Rangegowda Kumarswamy, 01 Kodihalli Village, Belenahalli Post Tarikere Taluk, Tarikere – 577 228, Karnataka. PAN : BZTPK 5029 C Vs.ITO, Ward – 1, Chickmagalur’. APPELLANTRESPONDENT Assessee by:Shri.V. Narendra Sharma, Advocate Revenue by :Shri.Ganesh R Ghale, Advocate, Standing Counsel for Revenue. Date of hearing:31.10.2023 Date of Pronouncement:31.10.2023 O R D E R This appeal at the instance of the assessee is directed against CIT(A)’s order dated 06.02.2023, passed under section 250 of the Income Tax Act, 1961 (hereinafter called ‘the Act’). The relevant Assessment Year is 2017-18. 2. There is a delay of 159 days in filing the present appeal. Assessee has filed a petition for condonation of delay and also an affidavit stating therein the reasons for belated filing of this appeal before the Tribunal. 3. I have perused the reasons stated in the affidavit for late filing of this appeal. I am of the view that there is reasonable cause for the delay in filing of the appeal and no latches can be attributed to the assessee. Hence, the delay of 159 days in filing this appeal is condoned and I proceed to dispose off this appeal on merits. ITA No.680/Bang/2023 Page 2 of 5 4. Brief facts of the case are as follows: Assessee, an individual, filed the return of income on 23.03.2017 declaring total income of Rs.58,520/-. Assessee had also admitted net agricultural income of Rs.3,85,000/-. The assessment was selected for scrutiny and notice under section 143(2) of the Act was issued to the assessee on 25.08.2018. The assessment under section 143(3) of the Act was completed vide order dated 21.11.2019. The AO had made an addition of Rs.7,12,500/- under section 69A of the Act. The relevant finding of the AO in making the aforesaid addition is as under: “On examination of the statement of bank account number 0697101015658 maintained with Canara Bank, it is seen that the assessee has made following cash deposits during demonetisation period (i) Rs. 73,000/-on 10/11/2016, and, (ii) Rs. 19,79,500/- on 12/11/2016. The assessee has also admitted of having made aggregate cash deposits in his bank account totalling to Rs. 20,52,500/- in his bank account during demonetisation period. On perusal of this bank statement, it is seen that the assessee has received Rs. 26,96,786/- on 12/09/2016 as closure proceeds of term deposits. Subsequently, the assessee has transferred Rs. 10,00,000/- on 12/09/2016 to Ms. Dhanlakshmi R. The assessee has also withdrawn following cash (i) Rs. 11,00,000/- on 03/10/2016. and. (ii) Rs. 2,40,000/- on 21/10/2016. Hence, it is seen that the assessee has made aggregate cash withdrawals of Rs. 13,40,000/- during October 2016. Hence, it is seen that the assessee had cash balance of Rs. 13,40,000/- from earlier cash withdrawals. The assessee has failed to furnish any information and documentary evidences regarding the nature and sources of entire cash deposited in his bank account during demonetisation period. Accordingly, the cash deposited during demonetisation period to the extent of Rs. 13,40,000/- is considered from earlier cash withdrawals and the balance amount of Rs. 7,12,500/- is treated as unexplained income of the assessee and added as unexplained cash u/s. 69A of the Income Tax Act, 1961 to the total income of the assessee under the head Income from Other Sources.” 5. Aggrieved, assessee filed appeal before the First Appellate Authority. Since there was no response to the notices issued from the Office of the First ITA No.680/Bang/2023 Page 3 of 5 Appellate Authority, the appeal of the assessee was dismissed in limine without adjudicating the issues on merits. 6. Aggrieved by the order of the CIT(A), assessee has filed the present appeal before the Tribunal. Assessee has filed a Paper Book enclosing bank statement of the assessee, copy of the acknowledgement for filing the return of income, RTC issued by the Revenue Department as a proof of agricultural land holding, etc. The learned AR by referring to the RTC issued by the Revenue Department submitted that assessee is having 15 acres of agricultural income. Out of 15 acres of land, 10 acres is planted with Arcanut trees. The learned AR submitted that assessee has gross agricultural income of Rs.7,10,000/- which has been completely ignored by the AO while making the addition under section 69A of the Act. It was submitted that since assessee was having adequate agricultural income, the addition of Rs.7,12,500/- is not warranted. The learned Standing Counsel submitted that the order of the AO is very fair and aggregate cash withdrawals of Rs.13,40,000/- during October, 2016, has been given due credit by the AO. Therefore, it was submitted by the learned Standing Counsel that the Order of the CIT(A) does not require any interference. 7. I have heard the rival submissions and perused the material on record. Assessee had made aggregate cash deposit of Rs.20,52,500/- in his bank account during the demonetization period. The AO, after noticing that assessee had closure on term deposit of Rs.26,96,786/- on 12.09.2016, gave a credit of Rs.13,40,000/- for the cash withdrawals immediately preceding the demonetization period. However, in the return of income filed, assessee had disclosed a net agricultural income of Rs.3,85,000/- and gross agricultural income of Rs.7,10,000/- for the impugned Assessment Year. The gross agricultural income received by the assessee during the Assessment Year has been completely ignored while making the addition under section 69A of the Act. Assessee has produced the RTCs issued ITA No.680/Bang/2023 Page 4 of 5 by the Revenue Department, Government of Karnataka, as regards the proof of holding the agricultural land. Assessee is having 15 acres of agricultural income. Out of 15 acres of land, 10 acres is planted with Arcanut trees. The agricultural income disclosed by the assessee has not been disputed by the assessee in the Assessment order completed. I am of the view that due credit ought to be granted for the gross agricultural income that is disclosed in the computation statement. However, some of the agricultural receipts could be post demonetization period. So, the entire gross receipts on account of agricultural operation cannot be given the credit as claim by the learned AR. 8. Various Standard Operating Procedures (SOPs) were laid down by the Central Board of Direct Taxes post demonetization period. The first of such instruction was Instruction No.3/2017 dated 21.02.2017. The second instruction was issued on 03.03.2017 vide Instruction No.4/2017. The third instruction was issued in the form of Circular dated 15.11.2017 in FA No.225/363/2017-ITA.II and the last one dated 09.08.2019 in F. No.225/145/2019-ITA.II. These instructions give directions regarding the kind of investigation/enquiry/evidence that AO is required to take into consideration for the purpose of assessing addition under section 69A of the Act. In instruction No.3/2017 dated 21.02.2017, the Board had stated that cash deposit upto Rs.2 lakhs need not be taken up for scrutiny as the same could be from past savings. 9. On the facts and circumstances of the present case, I am of the view that taking into consideration the gross agricultural income disclosed and the instruction No.3/2017, a sum of Rs.50,000/- alone need to be added under section 69A of the Act. Therefore, assessee gets a relief of Rs.6,62,500/- and Rs.50,000/- is sustained under section 69A of the Act. It is ordered accordingly. ITA No.680/Bang/2023 Page 5 of 5 10. In the result, appeal filed by the assessee is partly allowed. Pronounced in the open court on the date mentioned on the caption page. Sd/- Sd/- (LAXMI PRASAD SAHU) (GEORGE GEORGE K) Accountant Member Vice President Bangalore. Dated: 31.10.2023. /NS/* Copy to: 1.Appellants2.Respondent 3.DRP4.CIT 5.CIT(A)6.DR, ITAT, Bangalore. 7. Guard file By order Assistant Registrar, ITAT, Bangalore.